UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedFebruary 29, 2008
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934
For the transition period from ________to ________
COMMISSION FILE NUMBER000-52398
WESTMONT RESOURCES INC.
(Exact name of registrant as specified in its charter)
| NEVADA | 76-0773948 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 1621 Freeway Drive, Suite 209 | |
| Mount Vernon, WA | 98273 |
| (Address of principal executive offices) | (Zip Code) |
(360) 395-6040
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes [X]No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] Accelerated filer [ ] (Do not check if a smaller reporting company) | Non-accelerated filer [ ] Smaller reporting company [ X ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes [X]No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:As of April 14, 2008, the Issuer had 9,333,000 Shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
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| WESTMONT RESOURCES INC. |
| (An Exploration Stage Company) |
| CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
| February 29, | May 31, | |||||
| 2008 | 2007 | |||||
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Cash | $ | 606 | $ | 39,038 | ||
| Prepaid expenses | 180 | 180 | ||||
| Total Assets | $ | 786 | $ | 39,218 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||
| CURRENT LIABILITIES | ||||||
| Accounts payable and accrued liabilities | $ | 21,648 | $ | 4,332 | ||
| Due to related party | 5,489 | 13,820 | ||||
| Total Liabilities | 27,137 | 18,152 | ||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||
| Capital stock | ||||||
| Common Stock, 75,000,000 shares authorized, $0.001 par | ||||||
| value, 9,333,000 shares issued and outstanding | 9,333 | 9,333 | ||||
| Additional paid-in capital | 72,827 | 72,827 | ||||
| Deficit accumulated during the exploration stage | (108,511 | ) | (61,094 | ) | ||
| Total Stockholders’ Equity (Deficit) | (26,351 | ) | 21,066 | |||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | 786 | $ | 39,218 |
The accompanying notes are an integral part of these consolidated financial statements
| WESTMONT RESOURCES INC. |
| (An Exploration Stage Company) |
| CONSOLIDATED STATEMENTS OF EXPENSES |
| (Unaudited) |
| For the Three | For the Three | For the Nine | For the Nine | Period from | |||||||||||
| Months Ended | Months Ended | Months | Months | November 16, | |||||||||||
| February 29, | February 28, | Ended | Ended | 2004 (Inception) | |||||||||||
| 2008 | 2007 | February 29, | February 28, | Through | |||||||||||
| 2008 | 2007 | February 29, | |||||||||||||
| 2008 | |||||||||||||||
| Expenses | |||||||||||||||
| General and administrative | $ | 6,778 | $ | 10,463 | $ | 47,417 | $ | 32,436 | $ | 108,511 | |||||
| Net Loss | $ | (6,778 | ) | $ | (10,463 | ) | $ | (47,417 | ) | $ | (32,436 | ) | $ | (108,511 | ) |
| Net Loss Per Share – Basic and | |||||||||||||||
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | N/A | ||
| Weighted average shares | |||||||||||||||
| outstanding – Basic and Diluted | 9,333,000 | 9,333,000 | 9,333,000 | 9,333,000 | N/A |
The accompanying notes are an integral part of these consolidated financial statements
| WESTMONT RESOURCES INC. |
| (An Exploration Stage Company) |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| For the Nine | For the Nine | Period from | |||||||
| Months | Months | November 16, | |||||||
| Ended | Ended | 2004 (Inception) | |||||||
| February 29, | February 28, | Through | |||||||
| 2008 | 2007 | February 29, | |||||||
| 2008 | |||||||||
| Operating Activities | |||||||||
| Net loss | $ | (47,417 | ) | $ | (32,436 | ) | $ | (108,511 | ) |
| Adjustments to reconcile net loss to net cash | |||||||||
| used in operating activities | |||||||||
| Changes in operating assets and liabilities | |||||||||
| Increase (decrease) in prepaid expenses | – | (180 | ) | (180 | ) | ||||
| Increase (decrease) in accounts payable and | |||||||||
| accrued liabilities | 17,316 | (2,073 | ) | 13,317 | |||||
| Net Cash Used in Operating Activities | (30,101 | ) | (34,689 | ) | (95,374 | ) | |||
| Financing Activities | |||||||||
| Proceeds from issuance of common stock | – | – | 82,160 | ||||||
| Advances from related party | – | 5,848 | 13,820 | ||||||
| Repayments to related party | (8,331 | ) | - | - | |||||
| Net Cash Provided by Financing Activities | (8,331 | ) | 5,848 | 95,980 | |||||
| Decrease in Cash | (38,432 | ) | (28,841 | ) | 606 | ||||
| Cash - Beginning of Period | 39,038 | 73,707 | – | ||||||
| Cash - End of Period | $ | 606 | $ | 44,866 | $ | 606 | |||
| Supplemental Disclosures: | |||||||||
| Interest paid | $ | – | $ | – | $ | – | |||
| Income taxes paid | $ | – | $ | – | $ | – |
The accompanying notes are an integral part of these consolidated financial statements
| WESTMONT RESOURCES INC. |
| (An Exploration Stage Company) |
| Notes to the Consolidated Financial Statements |
| (Unaudited) |
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying audited interim financial statements of Westmont Resources have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with Westmont Resources’ audited 2007 annual financial statements and notes thereto contained in Westmont’s Annual Report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal reoccurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods present have been reflected herein. The results of operation for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosure required in Westmont’s fiscal 2007 financial statements have been omitted.
Going Concern
These financial statements have been prepared on a going concern basis, which implies Westmont Resources will continue to realize its asset and discharge its liabilities in the normal course of business. Westmont Resources has never generated revenue since inception and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of Westmont Resources as a going concern is dependent upon the continued financial support from its shareholders, the ability of Westmont Resources to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As of February 29, 2008, Westmont Resources has accumulated losses since inception. These factors raise substantial doubt regarding Westmont Resources’ ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Westmont Resources be unable to continue as a going concern.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report constitute "forward-looking statements". These statements, identified by words such as “plan”, "anticipate", "believe", "estimate", "should", "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under Part II – Item 1A “Risk Factors” and elsewhere in this Quarterly Report. We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly our Annual Reports on Form 10-KSB or Form 10-K and our Current Reports on Form 8-K.
As used in this Quarterly Report, the terms "we", "us", "our", “Westmont” and the “Company” mean Westmont Resources Inc. and its subsidiaries unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.
Overview
The following discussion and analysis summarizes our plan of operation for the next twelve months, our results for the nine months ended February 29, 2008 and changes in financial condition from May 31, 2007. The following discussion should be read in conjunction with Management’s Discussion and Analysis or Plan of Operation included in our Annual Report on Form 10-KSB filed on September 11, 2007.
We are an exploration stage company engaged in the acquisition and exploration of mineral properties. During the fiscal quarter ended February 29, 2008, we amalgamated our two mineral properties called “JB 1 Claim” and the “JB 2 Claim” located in the Province of British Columbia, Canada into one mineral property that we now call the “JB 1 Claim.” The newly formed “JB 1 Claim” is registered with the Ministry of Mines under tenure number 578808 and covers an area of approximately 1211 hectares. We own a 100% undivided interest in the “JB 1 Claim” and the property is in good standing until March 22, 2009.
Due to restrictions set by the Province of British Columbia on the ownership of mineral claims, title to the JB 1 Claim is currently held by our wholly owned subsidiary, Norstar Explorations Ltd., a British Columbia company. We are currently conducting mineral exploration activities on the JB 1 Claim in order to assess whether it contains any commercially exploitable gold, copper or silver reserves. Currently, there are no known mineral reserves on the JB 1 Claim.
PLAN OF OPERATION
Over the next twelve months, we plan to conduct mineral exploration activities on the JB 1 Claim in order to assess whether the property contains mineral reserves capable of commercial extraction. Our exploration program is designed to explore for commercially viable mineral deposits. We have not, nor have any predecessors, identified any commercially exploitable reserves of these minerals on the JB 1 Claim.
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We received a geological evaluation report on the JB 1 Claim, as formerly constituted, entitled “Report and Recommendations, JB 1 Claim Tenure No. 530766, Atlin Mining District Northwestern British Columbia Canada” prepared by our consulting geologist on April 23, 2006. The geological report summarizes the results of the history of the exploration of the mineral claim, the regional and local geology of the mineral claim and the mineralization and the geological formations identified as a result of the prior exploration. The geological report also gives conclusions regarding potential mineralization of the mineral claim and recommends a further geological exploration program on the mineral claim. Phases I, II and III of our recommended exploration program involve the following:
| Phase | Exploration Program | Cost | Status |
| Phase I | Review historic data for initial evaluation in the field; geochemical sampling and reconnaissance work; analyses of rock samples and stream sediment and soil samples. | $4,320 | Completed in the Spring of 2007. |
| Phase II | Satellite imagery and computer driven software programs to provide base maps and structural studies of the JB 1 Claim. | $7,420 | Completed in Fall of 2007. |
| Phase III | Continue surveys and conduct sampling work; trenching and drilling; continue assessment; helicopter-supported grid preparation and magnetometer and electromagnetic survey. | $25,000 | Expected to be completed in 2008. |
Work on Phase I of our exploration program was completed in the Spring of 2007 and consisted of a very limited program of geochemical stream sediment and rock sampling. The results of Phase I did not indicate any geologically anomalous values. However, acting on the recommendations of our consulting geologist we decided to proceed with Phase II of our exploration program.
Phase II of our exploration program was completed in the Fall of 2007. Surveys and geological mapping was undertaken using aerial and satellite imagery to provide base maps and structural studies on the former JB 1 Claim. We attempted to have rock and soil samples taken and analyzed, however, due to inclement weather conditions we were unable to access the JB 1 Claim. Based on a review of the satellite imagery we obtained of the former JB 1 Claim, our consulting geologist has recommended that we proceed with Phase III of our exploration program. Phase III of our exploration program is expected to consist of rock and soil sampling with a proposed budget of $25,000. We hope to engage consultants to visit the JB1 claim area to conduct Phase III of our exploration program in 2008.
As of February 29, 2008, we had cash on hand of $606 and a working capital deficit of $26,351. We do not currently have sufficient cash to pay for the anticipated costs of Phase III of our exploration program and meet the anticipated costs of operating our business for the next twelve months. In addition, there are no assurances that the actual costs of completing our exploration program will not exceed our estimates of those costs. We currently do not have any arrangements for additional financing.
During the exploration stage of our business, our sole officer and director will be devoting approximately 25% of his time to our business. We do not foresee this limited involvement as negatively impacting our company over the next twelve months since all exploratory work has been, and will continue to be, performed by outside consultants. Additionally, we will not have a need to hire any employees over the next twelve months, nor do we plan to make any purchases of
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equipment over the next twelve months. Outside consultants will be expected to provide all tools needed for the exploratory work being conducted.
We anticipate that we will incur the following expenses over the next twelve months:
| Category | Planned Expenditures OverThe Next 12 Months (US$) |
| Legal and Accounting Fees | $20,000 |
| Office Expenses | $3,000 |
| Mineral Property Exploration Expenses | $25,000 |
| TOTAL | $48,000 |
RESULTS OF OPERATIONS
Three Months and Nine Months Summary
| Three | Three | Nine | Nine | |||||||||||||||
| Months | Months | Months | Months | |||||||||||||||
| Ended | Ended | Percentage | Ended | Ended | Percentage | |||||||||||||
| February | February | Increase / | February | February | Increase / | |||||||||||||
| 29, 2008 | 28, 2007 | (Decrease) | 29, 2008 | 28, 2007 | (Decrease) | |||||||||||||
| Revenue | Nil | Nil | n/a | Nil | Nil | n/a | ||||||||||||
| Expenses | $ | (6,778 | ) | $ | (10,463 | ) | (35.2 | )% | $ | (47,417 | ) | $ | (32,436 | ) | 46.2% | |||
| Net Income (Loss) | $ | (6,778 | ) | $ | (10,463 | ) | (35.2 | )% | $ | (47,417 | ) | $ | (32,436 | ) | 46.2% |
Revenue
We have not earned any revenues to date. We do not anticipate earning revenues until such time as we enter into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such deposits are discovered, that we will enter into further substantial exploration programs.
Operating Expenses
Our general and administrative expenses decreased from $10,463 during the three months ended February 28, 2007 to $6,778 during the three months ended February 29, 2008. The decrease in general and administrative expenses was primarily due to a decrease in professional fees. Professional fees consisted of accounting and legal expenses incurred in connection with meeting our ongoing reporting obligations under the Exchange Act.
We anticipate our operating expenses will increase significantly as we proceed with our exploration program of the JB 1 Claim.
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LIQUIDITY AND CAPITAL RESOURCES
| Working Capital | |||||||||
| Percentage | |||||||||
| At February 29, 2008 | At May 31, 2007 | Increase / (Decrease) | |||||||
| Current Assets | $ | 786 | $ | 39,218 | (98.0 | )% | |||
| Current Liabilities | (27,137 | ) | (18,152 | ) | 49.5% | ||||
| Working Capital (Deficit) | $ | (26,351 | ) | $ | 21,066 | (225.1 | )% | ||
| Cash Flows | |||||||||
| Nine Months Ended | Nine Months Ended | ||||||||
| February 29, 2008 | February 28, 2007 | ||||||||
| Cash Flows Used in Operating Activities | $ | (30,101 | ) | $ | (34,689 | ) | |||
| Cash Flows Used in Investing Activities | - | - | |||||||
| Cash Flows From Financing Activities | (8,331 | ) | 5,848 | ||||||
| Net Decrease in Cash During Period | $ | (38,432 | ) | $ | (28,841 | ) | |||
The decrease in our working capital at February 29, 2008 from our year ended May 31, 2007 is primarily a result the fact that we had no revenue or sources of financing during the nine months ended February 29, 2008.
Since our inception, we have used our common stock to raise money for our operations and for our property acquisitions. When necessary, we have also relied on advances from our sole executive officer and sole director, Andrew Jarvis. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation. For these reasons, our auditors stated in their report to our audited financial statements for the fiscal year ended May 31, 2007 that there is substantial doubt that we will be able to continue as a going concern.
We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any of additional sales of our equity securities. In the past, we have also relied on advances from Mr. Jarvis when needed. However, there are no assurances that Mr. Jarvis will be willing to advance us additional funds in the future. There are no assurances that we will be able to arrange for other debt or other financing to fund our planned business activities.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES
We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting
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policies are disclosed in the notes to the audited financial statements included in our Annual Report on Form 10-KSB.
Exploration Expenditures
We follow a policy of capitalizing mineral property acquisition costs and expensing mineral property exploration expenditures until a production decision in respect of the project and we are reasonably assured that it will receive regulatory approval to permit mining operations, which may include the receipt of a legally binding project approval certificate.
Management periodically reviews the carrying value of its investments in mineral leases and claims with internal and external mining related professionals. A decision to abandon, reduce or expand a specific project is based upon many factors including general and specific assessments of mineral deposits, anticipated future mineral prices, anticipated future costs of exploring, developing and operating a production mine, the expiration term and ongoing expenses of maintaining mineral properties and the general likelihood that we will continue exploration on such project. We do not set a pre-determined holding period for properties with unproven deposits; however, properties which have not demonstrated suitable metal concentrations at the conclusion of each phase of an exploration program are re-evaluated to determine if future exploration is warranted, whether there has been any impairment in value and that their carrying values are appropriate.
If an area of interest is abandoned or it is determined that its carrying value cannot be supported by future production or sale, the related costs are charged against operations in the year of abandonment or determination of value. The amounts recorded as mineral leases and claims represent costs to date and do not necessarily reflect present or future values.
Our exploration activities and proposed mine development are subject to various laws and regulations governing the protection of the environment. These laws are continually changing, generally becoming more restrictive. We have made, and expect to make in the future, expenditures to comply with such laws and regulations.
The accumulated costs of properties that are developed on the stage of commercial production will be amortized to operations through unit-of-production depletion.
Donated Capital
In accordance with Statement of Financial Accounting Standards No. 116 (“SFAS 116”), “Accounting for Contributions Received and Contributions Made”, we reflect donated capital, such as outright gifts to us by way of donated management services provided, in the Statement of Operations.
Donated management services are recognized if the services received (a) create or enhance non-financial assets, or (b) require specialized skills, are provided by individuals possessing these skills, and would typically need to be purchased if not provided by donation.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer has concluded that these disclosure controls and procedures are effective.
There were no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
If we do not obtain additional financing, our business will fail.
Our current working capital is insufficient to meet the anticipated costs of Phase III of our exploration program on the JB 1 Claim and the anticipated costs of operating our business over the next twelve months. Therefore, we will need to obtain additional financing in order to complete our business plan. We have not earned any revenues from our mineral exploration since our inception. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors outside of our control, including the results from our exploration program, and any unanticipated problems relating to our mineral exploration activities, including environmental assessments and additional costs and expenses that may exceed our current estimates. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us in which case our business will fail.
We have yet to earn revenue from our mineral exploration and, because our ability to sustain our operations is dependent on our ability to raise financing, our accountants believe that there is substantial doubt about our ability to continue as a going concern.
We have accrued net losses of $108,511 for the period from our inception on November 16, 2004 to February 29, 2008, and have no significant revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development of our mineral claim. These factors raise substantial doubt that we will be able to continue as a going concern. In our Annual Report on Form 10-KSB, Telford Sadovnick, P.L.L.C., Certified Public Accountants, our former independent auditors, expressed substantial doubt about our ability to continue as a going concern given our accumulated losses. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital, we will not be able to complete our business plan. As a result we may have to liquidate our business and investors may lose their investment. Investors should consider our auditor's comments when determining if an investment in Westmont is suitable.
Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.
Investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The JB 1 Claim does not contain known bodies of commercial ore and, therefore, any program conducted on the JB 1 Claim would be an exploratory search of ore. There is no certainty that any expenditures made in the exploration of the JB 1 Claim will result in discoveries of commercial quantities of ore. Most exploration projects do not result in the discovery of commercially mineable deposits of ore.
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Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration program do not reveal viable commercial mineralization, we may decide to abandon our claim and acquire new claims for new exploration. The acquisition of additional claims will be dependent upon our possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations.
We have no known mineral reserves and if we cannot find any, we will have to cease operations.
We have no mineral reserves. If we do not find a commercially viable mineral reserve, or if we cannot complete the exploration of the mineral reserve, either because we do not have the money to do it or because it will not be economically feasible to do so, we may have to cease operations and investors may lose their investment. Mineral exploration is highly speculative. It involves many risks and is often non-productive. Even if we are able to find mineral reserves on our property, our production capability is subject to further risks including:
The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the lack of milling facilities and processing equipment near the JB 1 Claim, and such other factors as government regulations, including regulations relating to allowable production, importing and exporting of minerals, and environmental protection.
Given the above noted risks, the chances of finding reserves on our mineral property are remote and funds expended on exploration will likely be lost.
Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time we have no insurance to cover against these hazards. The payment of such liabilities may result in our inability to complete our planned exploration program and/or obtain additional financing to fund our exploration program.
As we undertake exploration of our mineral claim, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.
There are several governmental regulations that materially restrict mineral exploration. We will be subject to the laws of the Province of British Columbia, Canada as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. If we enter the production phase, the cost of complying with permit and regulatory environment laws will be greater because the impact on the project area is greater. Permits and regulations will control all aspects
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of the production program if the project continues to that stage. Examples of regulatory requirements include:
| (i) | Water discharge will have to meet drinking water standards; |
| (ii) | Dust generation will have to be minimal or otherwise re-mediated; |
| (iii) | Dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation; |
| (iv) | An assessment of all materials to be left on the surface will need to be environmentally benign; |
| (v) | Ground water will have to be monitored for any potential contaminants; |
| (vi) | The socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be re-mediated; and |
| (vii) | There will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species. |
Our annual cost of compliance with the Mineral Tenure Act, with respect to the JB 1 Claim, is currently approximately $4,811 CDN per year. There is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program. We will also have to sustain the cost of reclamation and environmental remediation for all exploration work undertaken. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Other potential pollution or damage must be cleaned up and renewed along standard guidelines outlined in the usual permits. Reclamation is the process of bringing the land back to its natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused. The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the recommended work program. If remediation costs exceed our cash reserves, we may be unable to complete our exploration program and have to abandon our operations.
Because our sole executive officer and director does not have formal training specific to the technicalities of mineral exploration, there is a higher risk that our business will fail.
Andrew Jarvis, our sole executive officer and sole director, does not have any formal training as a geologist and only limited training in the technical aspects of managing a mineral exploration company. With very limited direct training or experience in these areas, our management may not be fully aware of the specific requirements related to working within this industry. Our management's decisions and choices may not take into account standard engineering or managerial approaches mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry.
We may conduct further offerings in the future in which case investors shareholdings will be diluted.
Since our inception, we have relied on such equity sales of our common stock to fund our operations. We may conduct further equity offerings in the future to finance our current projects or
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to finance subsequent projects that we decide to undertake. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, investors’ percentage interest in us will be diluted. The result of this could reduce the value of their stock.
The quotation price of our common stock may be volatile, with the result that an investor may not be able to sell any shares acquired at a price equal to or greater than the price paid by the investor.
Our common shares are quoted on the OTC Bulletin Board under the symbol "WMNT.” Companies quoted on the OTC Bulletin Board have traditionally experienced extreme price and volume fluctuations. In addition, our stock price may be adversely affected by factors that are unrelated or disproportionate to our operating performance. Market fluctuations, as well as general economic, political and market conditions such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. In addition, to date, there has been no trading volume for our shares on the OTC Bulletin Board. As a result of this potential volatility and potential lack of a trading market, an investor may not be able to sell any of our common stock that they acquire that a price equal or greater than the price paid by the investor.
Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:
| 1. | contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; |
| 2. | contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; |
| 3. | contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
| 4. | contains a toll-free telephone number for inquiries on disciplinary actions; |
| 5. | defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
| 6. | contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. |
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask
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prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
| Exhibit | |
| Number | Description of Exhibits |
| 3.1 | Articles of Incorporation.(1) |
| 3.2 | Bylaws, as amended.(1) |
| 10.1 | Purchase Agreement dated March 21, 2005 between Andrew Jarvis and Norstar Explorations Ltd.(1) |
| 14.1 | Code of Ethics.(2) |
| 21.1 | List of Subsidiaries.(1) |
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| (1) | Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on October 13, 2006, as amended. |
| (2) | Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on September 11, 2007. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WESTMONT RESOURCES INC. | |||
| Date: | April 18, 2008 | By: | /s/ Andrew Jarvis |
| ANDREW JARVIS | |||
| Chief Executive Officer, Chief Financial Officer | |||
| President, Secretary and Treasurer | |||
| (Principal Executive Officer | |||
| and Principal Accounting Officer) |
